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Electric vehicles may be the future, but should taxpayers and utility customers be forced to pave their way with massive subsidies? That's what Xcel Energy is proposing and state regulators are considering.
Xcel is pushing regulators to approve $400 million in EV handouts. The plan would significantly increase electric bills and make Xcel, a monopoly utility, the dominant player in commercial electric vehicle charging.
This proposal is bad for utility customers, bad for competition and bad for small business.
The National Federation of Independent Business (NFIB) represents over 10,000 small businesses in every corner of Minnesota. They are the backbone of our state's economy.
In a recent survey of NFIB members in our state, over 94% of small businesses opposed paying higher taxes, fees or utility bills to fund EV subsidy schemes.
Xcel's latest EV subsidy plan comes as it seeks a $680 million increase in electric bills over three years just for maintaining and operating the electric grid.
Between the EV subsidies and the general rate increase, Xcel wants customers to pay nearly $1.1 billion more in the next five years. This will make our energy affordability problem even worse.
For years, Xcel's rates have increased far faster than electric utilities' around the country. According to federal data, Xcel's residential rates increased twice as much and commercial rates increased over 10 times more than the national average from 2008 to 2020.
And who benefits from Xcel's EV subsidies? It's primarily a transfer of wealth from hardworking families to wealthy individuals, according to the Minnesota Attorney General's Office.
Xcel's proposal is also fraught with anti-competitive concerns. Under Minnesota's regulated utility system, Xcel is a monopoly electric service provider with revenue collection and spending powers comparable to a government agency. In return, Xcel must provide reliable and affordable service to everyone in its territory.
As with the government, you can't shop around for better service or lower prices without moving. Xcel customers depend on state regulators to protect them from excessive costs and absurd schemes.
Unlike electric service, vehicle refueling is a competitive market. Whether gasoline or electric, there are private refueling stations across the state. As the number of privately owned electric vehicle charging stations grows, state regulators should not allow a monopoly utility to stomp on the free market.
Nor should they allow a monopoly utility to trap customers into paying for a risky plan. Electric vehicles currently represent less than one half of one percent of cars and light duty trucks in Minnesota and most charging is done at home during the night when it's least expensive. Xcel and its political allies are convinced massive public subsidies will change vehicle buying patterns and induce more people to charge outside the home.
It's easy to make promises with other people's money, whether it's tax dollars or ratepayer dollars. If Xcel's scheme fails to electrify consumers, Xcel's customers — not its shareholders — are on the hook for the ongoing cost.
And $400 million isn't enough for Xcel. It's asking the Minnesota Legislature to let them charge customers for more EV subsidies, including electric cars, boats, airplanes and ATVs.
If electric utilities want to own vehicle service stations, let them raise private capital to compete in the private market. If they believe electric car, airplane and boat charging is a good business opportunity, let them invest shareholder money instead of our money.
Don't force small businesses and hardworking families to pay even higher energy bills to subsidize electric vehicle makers and owners.
With blackouts increasing around the country, Xcel should withdraw its proposal and focus on providing reliable, affordable energy. Otherwise, state regulators should reject this scheme.
John Reynolds is the Minnesota state director for the National Federation of Independent Business (NFIB).